Weekly Feed Market Commentary
Published 4 December 13
The UK feed wheat futures price for Jan-14 delivery was worth £164.25/t as at Tuesday’s (3 December) close, representing a very slight decrease of 10p on the previous week. The Chicago maize futures price for Dec-13 delivery settled at $166.14/t, an increase on the previous week’s close ($164.76/t) but considerably lower than $251.87/t, the same time last year.
Global grain prices have generally stayed calm in the last few weeks with only the occasional rise and fall, in reaction to any news that could impact the supply and demand balance. However, no major threats have emerged to change the situation considerably.
For wheat, the most recent driver has been supply concerns for the Argentine wheat crop, which could mean more demand for US wheat, hence prices increased slightly. The main wheat regions continue to see dry conditions and it is now becoming too late for the stressed crop to see any beneficial yield increase, so production estimates are being reduced.
On the flip side, the Australian Bureau of Agriculture and Resource Economics and Sciences (ABARES) released its latest crop production forecasts on 3 December. Australia’s wheat output for the 2013/14 season is now projected at the third largest on record at 26.2 Mt, up 7% from the previous estimate made in September, mainly due to good rains across the southwest. This implies increased availability for exports and thus a downward movement in prices. However, the extent of any price decrease could be capped by demand, as China reportedly continues to demand Australian wheat. Latest projections by analysts suggest that China could import 7.5Mt of wheat in 2013/14 (2.96Mt, 2012/13; USDA).
For maize, there has been the news of China rejecting some US cargoes due to the presence of unapproved GM varieties; suggesting China could buy less US maize. The combination of a likely decline in demand and ample supply of maize means that no drastic price increase is anticipated for maize, compared with last year’s levels.
The protein market continues to receive confirmation of bigger soyabean crops from South America. The Brazilian Association of Vegetable Oil Industries (Abiove) now projects the 2013/14 Brazilian soyabean crop at 86.6Mt, up from 86Mt previously. Although lower than the 87.9-90.2Mt projected by CONAB (government’s crop supply agency), it will still be a record crop, if realised. The country is expected to export 51% of its soyabean crop this year, with closing stocks seen to increase to 5.39Mt from 2.34Mt in 2012/13.
The Chicago Dec-13 soyameal futures price settled at $491.74/t on 3 December, compared with $496.26/t the previous week. In the UK, the Hi pro soyameal (Ex-store, East Coast) price for February delivery was £367/t as at 29 November, down by £1/t on the previous week. The rapemeal price (Ex-mill Erith) was £215/t, for December delivery, a weekly increase of £12/t.
Despite the continued confirmation of ample supplies of soyabeans, strong demand continues to underpin prices. Demand for US soyabeans continues to grow, with the USDA reporting that export commitments stood at 36.8Mt as at 21 November, up 3.7% from the previous week. On a year-on-year basis, cumulative exports and sales have increased by 35%. China remains the main customer.
Figures and commentary provided in association with HGCA and BPEX.
For further information on the cereals market click here to link through to HGCA website.